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What to look for with private lenders

from Kent County, Delaware

posted about 2 years ago

I received an offer through Craigslist from an individual to privately loan money towards the rehab cost of a property I own free and clear. What types of things should I look out for? People often say there are scammers on Craigslist. Just looking for questions to ask and ways to safeguard the transaction.

Rental Property Investor from Gainesville, FL

I received an offer through Craigslist from an individual to privately loan money towards the rehab cost of a property I own free and clear. What types of things should I look out for? People often say there are scammers on Craigslist. Just looking for questions to ask and ways to safeguard the transaction.

Thanks.

I'm very hesitant of CL but that's me and the not so good experience I've had with it.

Have you tried posting here in BP to people that you converse with more?

I would meet with the person face to face to discuss the deal and specifics of what they are offering. Proof of funds? At some point I would think an attorney to draw up and bless the agreement? Have they loaned before and if so, is it reasonable to get references?

from Kent County, Delaware

replied about 2 years ago

@Daria B. Thanks for the reply. Those are good points. I will definitely request references as he did mention that he has loaned in the past. He apparently is a CPA by trade and also does some real estate investing. The interesting thing about it is that he offered the loan without me asking. My original reason for being on Craigslist was to see what interest I would receive for selling the home as-is. From that point, he offered to loan the funds. I will do my due diligence and of course involve my attorney if I decide to continue.

Developer, Real Estate Broker, from Lake Oswego OR Summerlin, NV

replied about 2 years ago

@Daria B. there are just as many loan scammers trolling BP as craiglist and facebook.

OP just don't give them any money up front.. open escrow with your attorney ( if its an attorney closing state) and let the lender bring his funds in to escrow.. the lender should prepare his own note and DT or mortgage or the lawyer should..

you can talk terms.. but just don't pass him or them any money and make sure it all goes through neutral escrow..

Rental Property Investor from Gainesville, FL

@Daria B. there are just as many loan scammers trolling BP as craiglist and facebook.

OP just don't give them any money up front.. open escrow with your attorney ( if its an attorney closing state) and let the lender bring his funds in to escrow.. the lender should prepare his own note and DT or mortgage or the lawyer should..

you can talk terms.. but just don't pass him or them any money and make sure it all goes through neutral escrow..

Very true, which is why I said: "Have you tried posting here in BP to people that you converse with more?" At least there is a better start talking to people that have been or can be vetted easier and from already conversing with - where the 1st words aren't "i'm looking for money or have money to loan."

Developer, Real Estate Broker, from Lake Oswego OR Summerlin, NV

replied about 2 years ago

@Daria B. I was looking for a construction loan on one of my projects in Charleston SC.. ( bank LOC was maxed)...

I got 7 hits on BP 2 were legit folks I had talked with the rest were scammers.. and I mean just pump and dump Due diligence scammers very very easy for me to tell ... but for many getting started they just don't know what they don't know and these guys and gals take them for 200 to 500 or more before they figure it out.

from Kent County, Delaware

replied about 2 years ago

@Daria B.@Jay Hinrichs Thanks! This is good information. I will see what I can find out. I will make sure the money is brought to escrow and no money is transferred from me. He is asking for monthly payments. Is it typical in these scenarios to have a monthly interest payment or are the interest payments normally applied to the final payoff?

Rental Property Investor from Gainesville, FL

@Daria B. I was looking for a construction loan on one of my projects in Charleston SC.. ( bank LOC was maxed)...

I got 7 hits on BP 2 were legit folks I had talked with the rest were scammers.. and I mean just pump and dump Due diligence scammers very very easy for me to tell ... but for many getting started they just don't know what they don't know and these guys and gals take them for 200 to 500 or more before they figure it out.

Oh yeah I know the type. You think you are talking for the sake of RE when the end run of these people is just to find out what you own or have so they can market their product to you. I experienced this recently while discussing through PM and then realized after the 3rd response the person was really just wanting to push his product. He wasn't interested in why I choose a particular investment strategy, he was interested in pushing his product. Needless to say the conversation ended and he moved onto others as I have seen the posts in BP by this person.

from Kent County, Delaware

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